LAHORE – Deputy Governor of the State Bank of Pakistan (SBP) Saeed Ahmed has stressed the need for creating awareness to promote the Islamic mode of banking that is fast gaining ground around the globe.
While talking to the LCCI Senior Vice President Almas Hyder, SBP deputy governor said that bankers should launch new schemes to attract people towards Islamic Banking. He said that though Islamic Mode of banking looks like conventional banking but there is a lot of difference between the processes.
Speaking on the occasion, LCCI Senior Vice President Almas Hyder said that today more than 250 Islamic financial institutions were operating worldwide from China to USA.
“Western banks through their Islamic units in UK, Germany, Switzerland, Luxembourg,.are also practicing Islamic banking,” he informed.
He said that the basic principle of Islamic banking is the prohibition of Riba or interest, which has seldom been recognised as applicable beyond the Islamic world, but many of its guiding principles have consciously or unconsciously been accepted.
“The majority of these principles are based on simple morality and common sense, which form the basis of many religions, including Islam,” he observed.
Hyder said that Islamic finance was being practiced in the Muslim world facilitating trade and business activities.
“In Spain and Baltic states, Muslim merchants became indispensable middlemen for trade activities. It is claimed that European financers and businessmen later adopted many concepts, techniques and instruments of Islamic finance,” he elaborated.
He said the Islamic financial system centered round the concept of participation in the enterprise, utilising the funds at risk on a profit and loss sharing basis. “This by no means implies that investments with financial institutions are necessarily speculative,” he clarified.
“This can be excluded by careful investment policy, diversification of risk and prudent management by the Islamic financial institutions,” he added.
The LCCI senior vice president suggested that the Islamic countries that had experimented the Islamic banking should be consulted so that the existing level of services could be improved and more diversified products could be introduced.